Guide to State and Federal Teacher Loan Forgiveness Programs

Written By Grant Fodness

Student Loan Forgiveness for Teachers

It's a dream for many people to attend college, obtain their desired degree, and get a job in their field. To achieve this goal, many people need help paying for college. Some turn to scholarships and grants that need not be repaid, while others turn to student loans. Since attending college would not be an option for many people without student loans, various student loan forgiveness programs have been developed to help ease the financial burden of attending college. Some of these programs are broadly applicable to all individuals, while others are more specific to a specific field such as education. This guide will discuss these student loan forgiveness programs available for teachers and provide some helpful tips for applying for student loan forgiveness for educators.

Why Consider Student Loan Forgiveness

Attending college can be expensive, and many students must rely on student loans to afford their degree. These loans can take on many different forms such as federal subsidized and unsubsidized loans, Perkins Loans, and private loans which must be repaid after an individual has graduated. However, for the average student this means graduating with over $32,000 of student loan debt, according to the Federal Reserve.

To illustrate the impact student loans can have on someone's finances and how teacher student loan forgiveness can help, consider the following example:

A new teacher attended a four-year university and obtained a bachelor's degree in elementary education. They had to take out student loans to pay for schooling where they accrued the average student loan debt at $32,731. Their options for repayment are to repay the loan in 10 years at a 6.8% interest rate or over an extended period of 25 years at an 6.8% interest rate, to lower monthly rate.

It's possible that the new teacher could have used an income-driven repayment plan and could have made payments based on their income for 20 or 25 years and had the rest of their loans forgiven, or they could have used a teacher student loan forgiveness program and had a potentially large portion of the $32,731 they borrowed forgiven. Regardless of the amount, having a portion of one's teaching loans forgiven is significant, and luckily for teachers, there are many different student loan forgiveness options available. Let's take a look at them.

Federal Student Loan Forgiveness Programs for Teachers

Each program provides teacher student loan forgiveness, but they have different eligibility requirements and forgive different amounts of a teacher's student loans. Reviewing the individual requirements for each teacher student loan forgiveness program is crucial in finding the one that is the best match for an individual based on their employment, loan type, and loan balance. It is also important to note that individuals with private student loans are not eligible for student loan forgiveness under these federal programs, as they only apply to individuals with federal student loans.

Many student loan forgiveness programs are specifically designed for teachers, including:

• Public Service Loan Forgiveness
• Teacher Loan Forgiveness
• Perkins Loan Cancellation for Teachers

Individuals who work in public service--namely for a federal, state, or local government organization or non-profit--may be able to receive loan forgiveness under the Public Service Loan Forgiveness Program (PSLF). Other programs, like the Teacher Loan Forgiveness (TLF) Program are more specific, and only apply to teachers who meet certain eligibility requirements like working in a high-need field or with an at-risk population. Additionally, certain types of loans, like Perkins Loans, may also be eligible for forgiveness under specific programs, and there are numerous state-sponsored programs designed to reward individuals for working or teaching in their state.

Teacher Loan Forgiveness Program

One popular federal teacher loan forgiveness program is the Teacher Loan Forgiveness Program (TLF). With this program, forgiveness is earned after working in a qualifying, low-income school for five consecutive years as a highly-qualified teacher. If a teacher has met all these requirements, they may receive up to $17,500 of student loan forgiveness depending on their subject of expertise. Teachers who believe they are eligible for forgiveness under this program submit an application after completing their fifth consecutive school year and then receive forgiveness once that application has been processed.

To be eligible for student loan forgiveness under Teacher Loan Forgiveness, one must be a highly-qualified teacher, meaning that they have obtained the appropriate degree, are certified or licensed in their state, and have not had that certification revoked in any way. Teachers new to the profession must also pass a standardized state test in their content area, like the Praxis Test, to demonstrate that they are highly qualified. Teachers who are not new to the profession can show that they are highly qualified through a uniform state evaluation.

The U.S. Department of Education maintains a directory of all the schools and educational service agencies that are considered low-income. Any Bureau of Indian Education (BIE) school qualifies as a low-income school, and so long as the school was listed in the directory for one of a teacher's five consecutive years of teaching, all five years at that school will count toward one's eligibility for Teacher Loan Forgiveness.

Those who teach secondary science or mathematics, or those who teach special education at any level, can receive forgiveness up to $17,500. Other teachers can receive forgiveness in the amount of $5,000 no matter what subject or grade level they teach so long as they meet the other eligibility requirements and serve a low-income population.

Public Service Loan Forgiveness (PSLF)

Under Public Service Loan Forgiveness (PSLF), however, anyone who is a teacher in any subject or at any public school (and even some private schools if they are not-for-profit) may be eligible for student loan forgiveness. PSLF is such a popular option because it can provide greater loan forgiveness and the employment requirements are more relaxed than Teacher Loan Forgiveness.

To be eligible for this program, individuals must have Direct Subsidized or Unsubsidized Federal Loans to receive forgiveness and must make 120 (or ten years) of qualifying payments toward their loan balance and certify their employment yearly. After they've done this, the remaining balance on their loans is forgiven, so PSLF might be a better option for some teachers than TLF if they have a higher loan balance. Other types of federal loans can be consolidated to qualify as well, but private loans do not qualify for PSLF.

One must also work for a qualified employer to obtain college loan forgiveness. A qualifying employer is one that provides public services, including government organizations at the federal, state, local, and tribal levels and non-profits. Public schools fall under government organizations and are considered qualifying employers for PSLF. Additionally, many private schools are also non-profits, so teachers at some private schools would also be deemed to have qualifying employment for PSLF. Each year, an individual must certify their employment to ensure that the payments made that year count toward Public Service Loan Forgiveness. This consists of completing a form and having an authorized representative from one's employer sign off on their employment with that entity before submitting it.

Once a person has made the necessary 120 payments (monthly payments for 10 years), they must submit another form to receive college loan forgiveness through PSLF. Individuals typically choose to make income-driven repayment to maximize the amount of their forgiven student loan debt. With an income-driven repayment plan, one's monthly payment is based solely on their income, not the principal and interest on their student loans. This can lead to loan forgiveness amounts that are much greater than the maximum of $17,500 under Teacher Loan Forgiveness, depending on the teacher's income and amount of student loan debt.

Perkins Teacher Loan Forgiveness

For those with Perkins Loans, Perkins Teacher Loan Forgiveness is an excellent option for teacher debt forgiveness. Perkins Loans are a type of Federal student loan administered by the college or university that one attends. Through Perkins Teacher Loan Forgiveness (also called Perkins Loan Cancellation for Teachers), teachers can have up to 100% of their Federal Perkins Loans forgiven after working a certain number of years.

To be considered eligible for this program, in addition to having Perkins Loans, a teacher must also work in a low-income school, similar to the TLF program. For Perkins Teacher Loan Forgiveness, teachers who do not serve a low-income population may still qualify for loan debt cancellation if they teach certain subjects. Those who teach special education, science, math, bilingual education, or foreign languages qualify for Perkins Teacher Loan Forgiveness. Additionally, preschool or pre-kindergarten teachers may be eligible as well as those who teach a subject that has a shortage of qualified teachers. The state education agency where one teaches determines which subject areas have shortages.

Private school teachers may also be eligible for Perkins Teacher Loan Forgiveness if the school where they teach is a 501(c)(3) non-profit organization and that school provides educational services that meet state law.

For teachers who qualify for Perkins Teacher Loan Forgiveness, a different percentage of their student loan debt is forgiven after each year of teaching service. After the first and second years of teaching, 15% of their Federal Perkins Loans are canceled. Then, 20% of a teacher's Perkins Loan debt is forgiven after each of their third and fourth years of teaching service. Finally, after their fifth year of qualifying service, the remaining 30% of their Perkins Loans are forgiven.

Teachers receive Perkins Teacher Loan Forgiveness after each year of service, so they can move from a low-income school or change the subject they teach and still receive some forgiveness if they do not teach for all five years. Unlike the Teacher Loan Forgiveness program, the five years of service do not need to be consecutive, and teachers can even combine two half-years of service as one full year of service so long as the half-years are consecutive.

States with Teacher Loan Forgiveness

In addition to the already-mentioned federal student loan forgiveness programs, many states also have teaching loan forgiveness programs that provide teachers with additional options for loan forgiveness. There are actually forty-seven states that offer state-based student loan forgiveness programs, plus the District of Columbia, so there are tons of options for borrowers looking for alternatives to the federal student loan forgiveness programs.

These state-sponsored student loan forgiveness programs vary significantly in the requirements and the amount of forgiveness they offer. Many of the teaching loan forgiveness programs require teachers to work in a geographic area experiencing a teacher shortage.

The following states have some of the most popular state-sponsored student loan forgiveness programs:

Tips for Teacher Student Loan Forgiveness

Consider Refinancing

Most borrowers do not have one loan or even one type of loan, and these loans often have different interest rates. Refinancing one's student loans can help lower monthly payments and the total amount of money paid in interest by getting a lower interest rate.

Find the Right Income-Driven Repayment Plan

There are many different ways to repay one's student loans, and for many borrowers, income-driven repayment lowers their monthly payments. If someone does not qualify for any of the teacher loan forgiveness options listed earlier, they can still receive forgiveness if they make payments on an income-driven repayment plan for a certain period (usually 20 to 25 years). As long as they make payments with their plan, their remaining loan balance is forgiven after that period.

Look to a Professional

Since there is so much to consider when it comes to student loan forgiveness, turning to a professional for help with one's student loans might be helpful. There are various companies offering their services to help with refinancing loans, setting up repayment plans, and matching a borrower with the right student loan forgiveness program.

Recertify Employment Yearly

Many student loan forgiveness programs require qualifying employment, and borrowers must recertify their employment yearly to get credit for the years of service. It may be helpful to set a yearly reminder to recertify employment to ensure that payments count toward one's student loan forgiveness program.

Keep Records

It is a good idea to keep all payment receipts and track how much money one has paid toward their student loan balance and how much money they have remaining.